Going back to the old adage that says ‘Prevention is better than Cure’; it is important to always take preventive steps when it comes to getting your home delivered to you on time. Since delays are so commonplace in India, one would be surprised if a builder delivers your home on time. So, here are a few steps you can take to safeguard your interests –
PREVENTIVE
1) Do your Homework
Ensure you have done your homework in assessing the track record of the builder. Look up blogs, forums and resident groups online to evaluate this. Talk to other buyers if you need to. A builder who has delivered homes on track in the past, is most likely to do it again. Likewise, someone who has frequently overshot the deadline and has been late on their commitments is most likely to do it again, as well.
2) Don’t Settle for a One-Sided Sale Agreement
Almost every builder will try to impose clauses that are favourable to them in the sale agreement. And almost every buyer tends to overlook them because the relationship at that point is friendly and based on trust. Most people seldom seek legal help to vet a sale agreement provided by the builder which comes loaded with one-sided clauses. For eg: If you delay a payment for any reason whatsoever, you will have to pay penal charges @ 18% or more. Whereas, the builder is automatically protected by a grace period clause which could vary between 6 months to even a year.
Second, the builder ensures that the clause for delay due to reasons other than force majeure (acts of God) will permit them to pay a trivial amount such as Rs.5 per square .ft. for every month of the delay. That would entitle you to receive Rs.10,000 per month for a 2000 square. ft. apartment, which is peanuts, given the cost of capital, the EMIs you are paying and the cost of not moving into your Rs.2 Crore apartment.
So, seek legal assistance to review, vet and negotiate the clause. It is no longer a sellers market and hence, builders will be willing to make the clauses more balanced and fair, provided you make demands and insist on it. If you don’t, they will push through with their agenda or give you easy excuses to wiggle away.
3) Keep Checking Progress
Track the progress of the construction and ensure that you are making milestone-based payments always. It is a bad idea to release payments in advance without checking progress just because a bank is paying the amount (your loan). Sticking to a discipline in terms of payments would force the builder to complete milestones on time. Your exposure will also be limited at any point of time.
REACTIVE
1) Put Cohesive Pressure
Form a buyer’s group, interact with your prospective neighbours and put pressure as a cohesive group on the builder, if you see that milestones are being missed continuously. You cannot build Rome in a single day, so it would be stupid to keep silent till the date of delivery even as you notice slow progress all through the project construction. If necessary, take legal assistance as a group to bear pressure.
Normally, the problem with buyers is in taking a consensual approach when the association is not yet formed. Different people tend to have different opinions on what takes priority. Remember, your first priority is on-time delivery along with the promised deliverables as per the sale agreement. If one sale agreement with a client promises wooden windows and the next sale agreement with another client promises UPVC windows, you cannot fight on why something different is being provided to another customer. The deliverables and the pricing could vary from client to client. So, choose your battles wisely and bring focus on delayed delivery.
2) Bring on Social Media
Social media can be useful, if everyone as a cohesive group tends to bring in pressure by lending their support to such a cause. The cause gets amplified and obviously every builder is worried about his reputation and the negative impact this could have. They would at the very least, be willing to discuss with you in a transparent manner and take you into confidence.
3) Be Prepared to Negotiate
There is nothing that cannot be resolved through negotiations provided both parties see the futility in fighting. If your sale agreements are not one-sided and there is an acknowledged delay from the builder and if you act as cohesive group, then the builder is most likely to come to the negotiation table. In such cases, ensure you have strong negotiators representing you or seek legal help, so that you are not bull dozed into accepting unfavourable things. It is a win-win if it results in a fair deal despite the delay (which could have been unavoidable from the builder’s point of view) and without the need to approach the courts.
4) Seek Legal Recourse
This would be the last step but the most important, if you have no choice. If your agreement is strong enough, then you can approach the consumer courts requesting for fair compensation due to the delay or enforce the penalties in the agreement. Yes, the consumers courts are faster than the civil courts, but it still can take anywhere between 6 months to even a couple of years for the case to go through due process. Again it helps, if there are a large number of people who are filing on the same matter, which will bring the builder to the negotiating table. But ensure you have possession over the property before you file the case because then you can at least start living in your new home and fight the case to a logical conclusion. Else, the builder can sometimes withhold / delay possession on some pretext or the other and cause you more damage.
We are hoping the Real Estate Regulatory Bill that has just been passed will open up a new avenue and a faster redressal system for home buyers. However, even after that comes into play, the applicability of the above tenets don’t necessarily change and hence, you have to be vigilant when you are buying a home, because it is a lifetime investment.